In standing still, the market spent the year doing the financial equivalent of a driver "feathering the clutch" in a car sitting midway up a steep incline: The direction of nature's pull was lower, but just enough force on the gas pedal now and then, with the exact right simultaneous pressure on the clutch, halted the backsliding and kept things steady, if precariously so.

The force of gravity, in this instance, was the macro/Euro/credit drama, constantly keeping investors on alert for some force majeure declaration that the financial system itself—banks, currencies, international trade arrangements—was again in peril. The fuel opposing it was corporate business conditions, with rising profits and plenty of cash on companies' books.

Part, but not nearly all, of last year's erratic daily pattern can be explained by the flight of patient capital from equities, leaving the field to the short-term scalpers and incentive-fee mercenaries who must trade to survive. According to fund-flow research firm EPFR Global, a net $75 billion departed U.S.-focused stock funds, a majority of the $123 billion that left developed-market funds. Another $47 billion on a net basis flowed out of emerging-market equity funds.

This is probably bullish for future multi-year equity returns, but says nothing about the next several months or even all of 2012. Just because an asset class has been orphaned doesn't mean it's about to be adopted by some other benevolent souls.

THE S&P 500 HAS RARELY FINISHED a calendar year very close to where it began. John Harris, a market historian and author, notes that since 1928, the S&P 500's total return in a given year has been between minus 5% and plus 5% only nine prior times, first in 1934 and most recently in 2005. He worked up some numbers about the performance of each subsequent year. The net result is a positive tendency, but sometimes with some nastiness in between.

The average S&P 500 return in years following those nine previous flattish years was 26.3%. Yet three of those years—1935, 1940 and 1982—held either a bear market or severe correction in store before things improved, with losses ranging from 15.2% to 28% at the year's low. (For the complete study, see (www.thewallstreettrafficlight.com.)

This nicely captures the present, with a pat bullish case based on a firming domestic economy, strong (for now) corporate fundamentals and aggressive money-printing countered by an uncomfortably high chance of credit meltdown and no clear path out of a developed world swimming in debt.

Brokerage-firm strategists are again putting out targets for an 8% one-year market gain, to 1360 on the S&P 500, basically last year's high. They practice the "art of the plausible," and such a target is that, assuming profits continue to grind higher and Europe declines its many invitations to implode.

The central-bank financing scheme put in place weeks ago in Europe was widely panned but truly could buy the banks and governments quite a bit of time, or at least stave off the sort of disorderly liquidation attack that investors are fearing. We need to see the markets operate free of the year-end pressures to shrink balance sheets, sell assets and trim risk to determine whether this is a valid working assumption. The U.S. housing market likely has bottomed and we could be one announcement away from a blowout jobs report.

Yet, there's a nagging, if rarely addressed concern: time. A year ago, there were signs (not embraced by many, but detailed in Barron's) that we could be in for a rerun of the 2005 market, in which prior bull-market gains were digested in range-y trading, with price/earnings multiples declining.

This happened in 2011. But the next act of this bullish production, following the example of 2006, would involve the "financial engineering" stage of a bull market, with buyouts and a leverage binge taking over from rebounding corporate profits. If the Euro-fix is seen to be in, risk appetites would surge and volatility would drop to accommodate such a scenario, but that's an "if" too big for most to bet on. The clock is also ticking on corporate profit margins, now at a record high. The market rarely puts a fatter multiple on very high margins.

AS ALWAYS, THE SUBTLETIES BELOW the surface complicate the picture of a motionless S&P 500 from Dec. 31 to Dec. 31. The Dow industrials, for one thing, rose 5.6% and delivered better than 8% with dividends. Last year's "Dogs of the Dow," the 10 highest-yielding stocks as of a year ago, earned double digits, appropriate in what might be called the "year of the dividend."

Stable, income producing sectors—utilities, health care and consumer staples—were the leaders. Such things as energy master-limited partnerships drew billions, high-dividend tech shares outperformed the overall sector by 15%, and the idea that income is paramount became conventional wisdom.

It's tempting to cast this as a "dividend bubble," but it's too early. There's no "greed story" attached to it yet, and utilities, for one, are vastly under-owned by institutions.

THE "MYSTERY BROKER" IS CONFLICTED as to whether we've been in a bear-market rally or the stirrings of a new bull market since early October. He has migrated for the week to this column from Streetwise, along with the columnist. His late September call in Streetwise for a new low in early October and subsequent rally toward 1300 on the S&P 500 adds to his formidable reputation for handicapping the market. Typically a man of conviction, he now says, "I have never seen so many mixed signals."

He doesn't expect a U.S. recession, often a prerequisite for a bear market, but acknowledges that risk aversion in equity behavior and sluggish financial-stock action smack of bear-market conditions. Framing last year's 20% decline (intra-day) as a mini-bear market, he maintains that the next two to three weeks will reveal whether we are in a new bull market or mired in a bear.

"Either the S&P 500 is going to advance to 1400 or higher in 2012," he writes in his latest client letter, "or it is going to decline to at least 1000 to 1030. There is no in-between. The stock market has never traded sideways for more than a couple of months [since 1950] following an initial rally after a 20% or more bear market."

To make him bullish, the S&P 500 must exceed 1300 soon, and financials and riskier stocks need to outperform. If not, then maybe last April's high was the high for this cycle.

Blue Chip

The Dow limped to the close of 2011, slipping less than 1%, but was a standout among the major indexes for the year, rising more than 5% as quality regained favor.

Report Card: Trader's Bearish Bets Scored

With 2011 now over, it's time to balance the accounts and tote up the wins and losses. Over the year, this column makes numerous stock calls, some bullish, some bearish, but all—it's hoped—interesting.

For the first eight months 2011, the Trader column was written by Kopin Tan, who now writes the Asia Trader column.

The bullish picks in that period fell 12.2% on average and underperformed the 6.2% loss for comparable indexes over the same period. Bearish picks did better. These skidded 23% on average, compared to declines of 9.1% for the benchmarks.

Gains and losses were measured from the Friday close before publication through Dec. 15, with large stocks compared to the S&P 500, mid-cap stocks measured against the S&P 400 index, and small stocks compared to the Russell 2000 Index.

In a schizophrenic year when the market careened abruptly between "risk on" and "risk off," nearly all bullish picks from the first half did poorly. Cyclical stocks that looked cheap got even cheaper as Europe wilted and global growth slowed. An actual stock portfolio might have been protected by things like profit taking after a big rally or stop losses in an extended slide, but these routine adjustments rarely merit fresh ink in a magazine column.